Types of dividends: Stressed Capital Ltd is being liquidated. The company's assets can be sold for $20 million. It will cost $18 million for the company to meet all its previous obligations and to pay-off debt holders. The company has 30 million shares outstanding. If you own 2,000 shares, how much do you expect to receive in dividends? Ignore tax.

Question

Quizplus · Accepted Answer

The company has $2 million left after paying off its obligations and debt holders. This means that each share is worth $2 million / 30 million shares = $0.06666. If you own 2,000 shares, you will receive $0.06666 * 2,000 shares = $133.33 in dividends.

Types of Dividends: Stressed Capital Ltd Is Being Liquidated